In an attempt to further streamline the merger control process, the Competition Commission of India (CCI) has for the sixth time[1] since the introduction of the merger control regime in India, amended the Competition Commission of India (Procedure in regard to the transaction of business relating to combinations) Regulations, 2011 (Combination Regulations).

The amendments to the Combination Regulations, notified on 9 October 2018(Amendment Regulations), reiterate the CCI’s constant endeavour to bring greater clarity and transparency to the merger control process.More importantly, this set of amendments showcases the CCI’s pro-business approach. The proposed amendments (at the draft stage) also sought to make sweeping changes to the exemption dealing with minority acquisitions by including additional caveats to its applicability, which would have vastly narrowed down its scope. Such amendments, if implemented, would have subjected most non-controlling minority acquisitions (which have no effect on competition) to the mandatory and suspensory merger control regime.

However, it appears that the CCI has chosen not to bring about this change after taking into consideration the representations made by various stakeholders against such amendment and its potential ramifications on “doing business” in India.

The notable changes introduced by the Amendment Regulations are set out below:

Withdraw and Refile

In a significant step forward, the Amendment Regulations now provide notifying parties with the option to withdraw and refile a merger notification, before the CCI issues a show cause notice (SCN). [2] In this regard, the CCI has also clarified that the filing fee already paid shall be adjusted against the fee payable for the new notification, provided the new notification is given within three months from the date of withdrawal. While there have been instances in the last year where parties have been able to “pull and refile” merger notifications, this amendment formalises the mechanism.

Modifications to Combination

In a welcome move to expedite the approval process, the Amendment Regulations also clarify that notifying parties may now offer voluntary modifications, post the issuance of an SCN under Section 29 of the Competition Act, 2002 (Act). Now, notifying parties can offer modifications even while providing their response to the SCN and the CCI can, on the basis of such voluntary modifications, approve the combination. By being provided the opportunity to offer voluntarily modifications at the stage of the SCN, notifying parties can allay the CCI’s potential concerns, without having to undergo in-depth scrutiny under Phase II. Similar to the previous amendment, this is also an attempt to explicitly include what the CCI was already following in practice.

Clarification regarding Timeline

The Amendment Regulations clarify that certain time periods (such as the time taken by the parties to provide additional information, remove defects from the filing, provide additional details when an incomplete notification has been filed, the time taken by the CCI to consider validity of the merger filing or voluntary modifications offered by parties, etc.) shall be excluded from the 210-day timeline mentioned under Section 6(2A) of the Act, which requires parties to wait until the expiry of 210 days from the date of notification, before giving effect to notifiable transactions/combinations. This amendment is merely clarificatory in nature given that these time periods are already excluded from Section 31(11) of the Act, which stipulates that if the CCI does not approve/block a transaction within 210 days from the date of notification to the CCI, the combination will be deemed as approved.

Key Takeaway

Effectively, the amendments are procedural in nature and provide greater clarity by incorporating in letter what the CCI has been practising in spirit. However, what is notable is that the CCI has been proactive in constantly refining the Combination Regulations, particularly in addressing concerns put forward by various stakeholders.

[1] The Combination Regulations were first introduced on 11 May 2011 and were subsequently amended on 23 February 2012, 4 April 2013, 28 March 2014, 1 July 2015 and 7 January 2016.

[2] Combinations are tested by the CCI on the basis of whether or not they cause any appreciable adverse effect on competition (AAEC) within the relevant market(s) in India. If the CCI is of the prima facie view that a combination causes or is likely to cause an AAEC, it is required to issue an SCN to the notifying parties to show cause as to why the combination should not be examined in Phase II (in-depth investigation).